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ATO puts tax cop hat on: What you can and can’t claim this tax time
The ATO is re-establishing itself as tax cop, with the office said to clamp down on overinflated work-related expenses this tax time.
ATO puts tax cop hat on: What you can and can’t claim this tax time
The ATO is re-establishing itself as tax cop, with the office said to clamp down on overinflated work-related expenses this tax time.
In 2020, around 8.5 million Aussies claimed nearly $19.4 billion in work-related expenses, with some clear trends emerging as a result of COVID-19 lockdowns and subsequent changes to the way we work. But while car and travel expenses were contracted by 5.5 per cent in 2020, the ATO now expects these to deflate even down further given our limited movement.
In a warning issued to taxpayers, assistant commissioner Tim Loh said that while some claims are expected to increase, car and travel claims are unlikely to be among them.
“If you are working at home, we would not expect to see claims for travelling between work sites, laundering uniforms or business trips,” Mr Loh said.
“Our data analytics will be on the lookout for unusually high claims this tax time, particularly where someone’s deductions are much higher than others with a similar job and income.”
Flagging potential alarm bells, Mr Loh said the ATO will be looking closely at anyone with significant working-from-home expenses that maintains or increases their claims for things like car, travel or clothing expenses.
“You can’t simply copy and paste previous year’s claims without evidence,” Mr Loh warned.
“But we know some of these unusual claims may be legitimate. So, if you explain your claim with evidence, you have nothing to fear.”
Despite returning to its tough tax approach, Mr Loh said the ATO will be sympathetic to legitimate mistakes where good-faith efforts have been made.
“However, where we spot people deliberately claiming things they’re not entitled to, we will take firm action,” Mr Loh said.
How COVID-19 has changed work-related expenses
Working-from-home expenses
The temporary shortcut method for working-from-home expenses is available for the full 2020–21 financial year. This allows an all-inclusive rate of 80 cents per hour for every hour people work from home, rather than needing to separately calculate costs for specific expenses.
All you need to do is multiply the hours worked at home by 80 cents, keeping a record such as a timesheet, roster or diary entry that shows the hours you worked.
“Remember, the shortcut method is temporary,” the ATO said.
“If you want to claim part of an expense over $300 (such as a desk or computer) in future years, you need to keep your receipt.”
Personal protective equipment (PPE)
If specific duties require physical contact or close proximity to customers or clients, or your job involves cleaning premises, you may be able to claim items such as gloves, face masks, sanitiser or anti-bacterial spray.
This includes industries like healthcare, cleaning, aviation, hair and beauty, retail and hospitality.
“To claim your PPE, you’ll need to have purchased the item for use at work, paid for it yourself, and not been reimbursed. You also need a record to support your claim — a receipt is best,” the ATO said.
Clothing and laundry, self-education, car and travel expenses
In 2020, the ATO saw a decrease in the value of work-related expenses for cars, travel, non-PPE clothing and self-education as a result of the introduction of travel restrictions and limits on the number of people who could gather in groups.
The ATO said: “We expect this trend to continue in the 2021 tax returns.
“If an employee is working from home due to COVID-19, but needs to travel to their regular office sometimes, they cannot claim the cost of travel from home to work, as these are still private expenses.”
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